Lindenstrauss slams parties over real estate

In a highly critical report published Sunday, State Comptroller Micha
Lindenstrauss revealed failures in the way several of the country’s major
political parties have managed their real estate assets.

The report
criticized the Labor Party, Likud, the National-Religious Party, Hadash and
Meretz for several irregularities, including that they did not have agreements
or other documents required to prove their rights to some of the assets to which
they claimed ownership.

In another part of the report, Labor and the
Communist Party come under fire for owing millions of shekels in property taxes
to local authorities.

The Communist Party forms a part of the Jewish-
Arab socialist front Hadash, which has four MKs. It owes NIS 2.07 million in
unpaid taxes, the report revealed, due to years’ old debts.

The Communist Party also drew criticism for failing to officially
register in its own name several of the 33 properties to which it claims
rights.

The Communist Party, Labor, and the National-Religious Party had
failed to provide an annual report listing their property assets, as required by
law, Lindenstrauss found – whereas some of the reports given by the Communists,
Likud, Labor, and the National-Religious Party were incorrect or missing
data.

The National-Religious Party, known by its Hebrew acronym Mafdal,
merged with Habayit Hayehudi in 2008.

Two party corporations – Labor’s
Berl Katznelson Foundation and Likud’s Tel Hai Fund, had not made proper use of
the properties they controlled, Lindenstrauss said.

Some properties
leased by Labor’s Beit Arlozoroff corporation were supposed to be used for
running party offices or clubs but were in fact put to other uses, the report
found.

Likud, Labor and the National-Religious Party had failed to set a
long-term policy for asset management and purchase, the report
said.

Among other things, the report also found that Likud had not
established its claim of rights to 10 properties affiliated to the Liberal Party
(an ancestor of Likud, which ceased to exist in 1988 when Likud was
unified).

With regard to left-wing party Meretz, the audit found that the
party had no documents regarding its rights to a Tel Aviv building that it has
used for years.

The report also takes Labor to task over a 2008 NIS 98.3
million real estate transaction between its Berl Katznelson Foundation and Beit
Berl College, the Labor Party-run institution near Kfar Saba.

Labor had a
vested interest in the transaction because it intended to use part of the
proceeds to cover its debts, the report said, but the Berl Foundation’s board
had not approved the transaction in accordance with the law.

Instead,
Lindenstrauss said, the foundation’s thendirector had acted alone in his
dealings with Beit Berl, instead of acting through and with the
board.

The report said that in March 2006, the Berl Foundation signed a
mediation agreement with Beit Berl College aimed at settling a dispute over an
annual lease fee that the college had to pay.

During the mediation
process the two sides agreed that the college would pay the fund NIS 98.3
million, part of which involved the college subletting 14 hectares of land on
which were several buildings.

In practice, the report found, this had
been essentially a sale transaction the foundation undertook to relinquish its
primary leasing rights in favor of the college, receiving a sum of money in
return for discounted land lease fees. Lindenstrauss noted that the assets had
been valued at around NIS 178 million, considerably more than the
transaction.

The audit revealed a litany of failures regarding the
mediation agreement, including that the Berl Foundation’s board had not come to
any formal decision confirming the appointment of a mediator. Neither had
the board outlined any policy regarding the position it wanted to take in the
mediation, the report said.

Lindenstrauss said the foundation’s actions
indicated it had responded to the Labor Party’s request to use its assets to
improve the party’s difficult economic situation, and therefore agreed to the
lower-value deal.

Lindenstrauss called on the Berl Katznelson Foundation
to review the land deal it made with Beit Berl College, taking into account the
provisions of the law.

Lindenstrauss said all parties must establish
policies and procedures for managing their assets, including registering them as
well as sales and leasing.

Parties must move to clarify their property
rights, he said, and must protect those rights to generate the maximum income
from their assets and repay any debts.

In response to the report, a Labor
spokesman said Sunday that the party “embraces the state comptroller’s report,
and notes that the audit’s comments referred to past years.”

Labor said
it was “acting and will act to learn the lessons, correct the shortcomings and
implement the recommendations made in the report.”

“The issues discussed
in the report occurred during the tenure of former officials, and the party’s
current leadership and management believe it is of paramount importance to apply
proper management procedures both to the party and to its subsidiary
corporations,” the spokesman said.